'Cocktail of confusion': call for throttle to stop mobile bill shock

Sarah Whyte, Ben Grubb

The Australian communications regulator has called for the major telcos to deliberately slow down data speeds on mobile plans when customers reach their data usage limit – in what they describe as a final hurdle for consumers to escape "bill shock".

Alan Chalmers, manager of consumer interests at the Australian Communications Media Authority (ACMA), said it would be a “major step forward for consumers” if telcos adopted the “shaping” model that had proved enormously successful for T-Mobile in the American market.

The model, also known as throttling, slows down the internet data speed on a mobile phone when a customer reaches their download quota to reduce costs to the consumer.

It is already popular on many fixed-lined broadband plans in Australia and would remove the need to have excess usage charges for data.

“That would be an excellent development for consumers,” Mr Chalmers said.

A report from a public inquiry conducted by the ACMA in 2011 estimated that collectively Australian consumers spent $1.5 billion more than they have to each year because they choose the wrong mobile plan. Telcos and their customers spent a further $108 million resolving complaints, while telcos wrote off up to $113 million annually in bad debts incurred through bill shock. Updated figures have not been released to show if the cost has gone down.

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The number of complaints received by the Telecommunications Industry Ombudsman (TIO), however, has already begun to dramatically drop since ACMA began making telcos issue instant alerts via SMS if a user goes above their data usage limit.

That measure was made mandatory in September for major telcos as part of a consumer protection code announced in July 2012. But it still means customers can rack up large bills if they don't keep a close eye on their data usage and their phone messages. Further, the SMS alerts can be delayed by up to 48 hours, especially if a customer is overseas, meaning the messages can often be received well after a user has gone over their download limit.

A separate survey conducted in December by the telco's Communications Alliance industry body found mixed results, with incremental gains in some areas being offset by declines against several metrics. The quarterly national survey showed a small increase in the percentage of customers satisfied or very satisfied with the service they receive – up from 65 per cent to 66 per cent - but the same metric fell from 83 per cent to 81 per cent after including those customers who had a neutral view on overall service.

Optus said it had already seen a 36 per cent decline in complaints to the TIO over the past year, in part due to moving consumers up to the next plan rather than charging them excess fees.

“Over July, August and September 2013, we had a 50 per cent decline in complaints compared to the exact same quarter in 2012,” a spokeswoman said.

The Australian Communications Consumer Action Network (ACCAN), the peak body that represents consumers on communications issues, said it was time for telcos to start focusing on data, not calls and texts.

“Often consumers have to figure out the right mix of calls, texts and data that they'll need and compare this across providers – creating a cocktail of confusion,” ACCAN chief executive Teresa Corbin said.

Last Monday Vodafone lowered its prepaid international calling rates in 12 countries, describing it as “another bonus” for customers.

Virgin has also announced a shift in its mobile packages.

“Last year we announced a shift in business strategy, adopting a more customer-centric brand positioning which will see Virgin Mobile take an even more customer-focused approach,” a spokeswoman said.